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Direxion Launches Leveraged Mid-Cap ETF

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Direxion launched a new fund on Feb 15, 2018, focused on providing 1.25x exposure to the mid-cap space of the U.S. equity markets.

Portfolio+ S&P Mid Cap ETF PPMC tracks the S&P Mid Cap 400 Index (+125%) and provides leveraged access to the mid-cap space of the U.S. equity markets.

Fund Characteristics

The fund's index seeks to provide investment results that closely track the performance of mid-cap companies in the U.S. markets. The S&P Mid Cap 400 Index measures the performance of 400 American mid-sized companies and is a float-adjusted market capitalization weighted index. It has amassed AUM of $25 million within a few days of trading and has a moderate expense ratio of 40 basis points a year.

From a sector look, Information Technology, Financials and Industrials are the top three allocations of the index, with 17.5%, 17.1% and 15.8% exposure, respectively. From a top holdings perspective, the index has 0.7% exposure each to Take Two Interactive Software Inc TTWO , SVB Financial Group SIVB and NVR Inc NVR . However, investors should note that investing in mid-cap stocks requires a steady appetite for risk, as they are more volatile than their large-cap counterparts.

How Does it Fit in a Portfolio?

U.S. markets recently suffered a sell-off owing to fears of rising interest rates. The S&P 500 entered correction territory, as it declined more than 10% from the record high set in January.

However, mid-caps appeal to investors as they still have some growth potential and are relatively less risky than their small-cap counterparts. U.S. economic fundamentals seem to be strong with a slew of upbeat economic data, strong corporate fundamentals and President Donald Trump's tax-reform signed into law. Mid-caps have less international exposure compared to large-caps and are expected to benefit greatly from the tax reform and provide diversification benefits to investors.

Competition

The fund faces a lot of competition from other funds in the space. Below we discuss a few ETFs that seek to provide exposure to the mid-cap space of the U.S. equity markets (see all Leveraged Equity ETFs here ).

Direxion Daily Mid Cap Bull 3X SharesMIDU

This fund provides 3x leveraged exposure to mid-sized U.S. equities.

It has AUM of $63.7 million and charges a fee of 109 basis points a year. Information Technology, Financials and Industrials are the top three allocations of the index, with 17.5%, 17.1% and 15.8% exposure, respectively (as of Dec 31, 2017). From a top holdings perspective, the index has 0.7% exposure each to Take Two Interactive Software Inc, SVB Financial Group and NVR Inc. (as of Dec 31, 2017). The fund has returned 18.8% in a year. Zacks does not rank inverse and leveraged ETFs in view of their short-term performance objectives.

ProShares UltraPro MidCap400UMDD

This fund provides 3x leveraged exposure to mid-sized U.S. equities.

It has AUM of $43.7 million and charges a fee of 95 basis points a year. Information Technology, Financials and Industrials are the top three allocations of the index, with 17.5%, 17.1% and 15.8% exposure, respectively (as of Dec 31, 2017). From a top holdings perspective, the index has 0.7% exposure each to Take Two Interactive Software Inc, SVB Financial Group and NVR Inc. (as of Dec 31, 2017). The fund has returned 19.4% in a year. Zacks does not rank inverse and leveraged ETFs in view of their short-term performance objectives.

ProShares Ultra Midcap 400MVV

This fund provides 2x leveraged exposure to mid-sized U.S. equities.

It has AUM of $146.3 million and charges a fee of 95 basis points a year. Information Technology, Financials and Industrials are the top three allocations of the index, with 17.5%, 17.1% and 15.8% exposure, respectively (as of Dec 31, 2017). From a top holdings perspective, the index has 0.7% exposure each to Take Two Interactive Software Inc, SVB Financial Group and NVR Inc. (as of Dec 31, 2017). The fund has returned 16.2% in a year. Zacks does not rank inverse and leveraged ETFs in view of their short-term performance objectives.

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SVB Financial Group (SIVB): Free Stock Analysis Report

NVR, Inc. (NVR): Free Stock Analysis Report

DIRX-MC BULL 3X (MIDU): ETF Research Reports

Take-Two Interactive Software, Inc. (TTWO): Free Stock Analysis Report

PRO-ULTR MC400 (MVV): ETF Research Reports

PRO-ULT MID400 (UMDD): ETF Research Reports

PPLUS-SP MC (PPMC): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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